Brokers urged to prioritise recognising consumer vulnerability as arrears rise

LiveMore is calling on lenders and intermediaries to take particular note of the vulnerability aspect of the Consumer Duty rules, as new data shows a rise in mortgage arrears and non-payment of bills.

LiveMore is urging the mortgage industry to be extra vigilant in today’s cost of living crisis as recent data from UK Finance shows more people are facing arrears – up 7% to 81,900 borrowers in the second quarter of this this year. Meanwhile, Which? has reported 2.4 million households missed bill payments in July.

Money worries is just one aspect of vulnerability with the FCA defining a vulnerable customer as ‘someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care’.

LiveMore points out that the onus within the Consumer Duty rules is on firms to identify potential vulnerability, which can sometimes not be immediately visible and often customers do not consider themselves to be vulnerable.

This can be even more prevalent in the 50-90+ age group where health may be an issue or people have experienced a life event such as losing a loved one. There is also the need to identify the capacity of people’s understanding of financial issues as they may have limited knowledge or ability with numbers or literacy, or poor digital skills.

Leon Diamond, CEO and founder of LiveMore, commented: “The introduction of Consumer Duty could not be timelier and as an industry we must all take the issue of vulnerability very seriously. More people are struggling financially, which can impact their mental health.

“Taking vulnerable customers into account at every stage of developing products and services, will help firms to meet their clients’ needs and avoid causing harm.

“It is also important to have robust processes in place to spot and respond to vulnerability, make customers aware of support available, and have systems to record and retrieve information about customer needs.

“Lenders and intermediaries have a clear role to play in making sure consumers, especially those with any vulnerability, have access to good advice and good outcomes.”